The Senate’s Secretly Bipartisan Health Bill

By Avik Roy

June 26, 2017

In 2010, when Democrats passed the Affordable Care Act, Republicans complained that they did so with no Republican support. Democrats responded by pointing out that the centerpiece of their plan — tax credits to buy private insurance — came from a Republican governor, Mitt Romney of Massachusetts.

Something similar is happening today. Democrats are denouncing the partisan nature of the Republican effort to repeal and replace Obamacare. They’re right to note that if the new bill passes the Senate, it will do so along party lines.

But the core planks of the Senate Republicans’ health bill — the Better Care Reconciliation Act — borrow just as much from Democratic ideas as Obamacare borrowed from Republican ones.

The Senate bill’s plan to reform Medicaid by tying per-enrollee spending to medical inflation through 2025 and to consumer inflation thereafter was borrowed from a nearly identical 1995 proposal by President Bill Clinton. Indeed, the main difference between the Clinton proposal and the Republican one is that the Clinton proposal would have tied per-enrollee spending to growth in the gross domestic product. Historically, medical inflation has been higher than G.D.P. growth.

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Mitch McConnell, the Senate majority leader, meeting with Republicans about the health care bill on Thursday.CreditDoug Mills/The New York Times

The Senate bill replaces the A.C.A.’s Medicaid expansion with a robust system of tax credits for which everyone under the poverty line is eligible. Under Obamacare, you could enroll in private insurance exchanges only if your income exceeded the poverty line.

The tax credit system employed in the Senate Republican bill is stronger than the A.C.A.’s, because it adjusts the value of the credits not only to benefit those with low incomes but also to encourage younger people to enroll in coverage.

If the Republican plan increases participation by the young, premiums will become more affordable for everyone, because insurers set premiums to reflect an average of the costs of covering everyone who signs up for a given insurance plan. If only older people sign up, average costs in the plan are higher, leading to higher premiums. If young and old sign up, average costs are lower, and premiums go down.

The bipartisan heritage of the bill does not eliminate areas of philosophical disagreement between conservatives and progressives. It increases the role of private insurers, and decreases the role of state-run Medicaid programs in covering the uninsured. It reduces federal spending on health care, whereas Obamacare increased it. The Senate bill repeals or rolls back all of the A.C.A.’s tax increases.

But think about it this way. Imagine an alternate universe in which, in 2009, Democrats and Republicans passed a bipartisan health bill. That bipartisan bill — let’s call it the Baucus-Collins Act — expanded coverage to tens of millions of Americans through a system of means-tested, age-adjusted tax credits in a voluntary-but-regulated individual insurance market where insurers were required to charge the same premiums to the sick and the healthy and guarantee coverage for those with pre-existing conditions.

In the Baucus-Collins Act, this increased spending on the uninsured was paid for through reforms of the Medicare program. In addition, the alternate-universe bill enacted a near-replica of Mr. Clinton’s proposal for Medicaid reform in order to make the program fiscally sustainable over the long term. The act also capped the previously unlimited tax break for employer-sponsored health insurance, albeit at a high threshold.

Democrats and Republicans would be celebrating historic reforms that expanded coverage in a fiscally responsible way. Both blue states like California and red states like Texas would see substantial coverage gains. And we might be talking about further bipartisan efforts to strengthen the Baucus-Collins Act.

What I’ve just described as a bipartisan achievement is, in effect, the synthesis of Obamacare and the Senate Republican health care bill. Under this combination of reforms, states like Texas and Florida — states that didn’t expand Medicaid — could see substantial coverage gains, because residents would be eligible for the Senate bill’s means-tested tax credits.

It’s likely that, if the Senate bill passes, more Americans will have health insurance five years from now than do today.

The Congressional Budget Office believes that solely because Republicans would repeal the A.C.A.’s individual mandate, by 2026, more than 15 million fewer people will buy health insurance, regardless of what senators do to direct more financial assistance to the poor and the vulnerable. That’s not a flaw in the Senate bill; it’s a flaw in the C.B.O.’s methods.

There are areas of the Senate bill that should be improved. Republicans should appropriate additional funds to help low-income enrollees afford their deductibles. States could choose to deploy these additional funds either as direct cost-sharing subsidies or as health savings accounts that individuals would themselves control.

But make no mistake: If the Senate passes this bill, after the partisan noise has died down, we will look at the 2010s as a period of substantial progress in American health care.